A health savings account or HSA, is one of the newer products available from the health insurance industry, having been established in 2003. An HSA-qualified health plan is typically a high deductible Preferred Provider Organization, or PPO, plan which usually has a low monthly premium. The point of the high deductible/low premium is to encourage you to open the HSA, which acts like a checking account you use to pay off health expenses. There are also tax benefits to opening an HSA and the money in the account does accumulate interest. Most banks in the United States will let you open an HSA in a process that is not difficult.
Instructions
Starting your account
1. Starting an HSA is a simple as a trip to your bank or your bank's website. Some banks will allow you to start the account in person, while others allow it only online. Have your Social Security number, photo ID and insurance plan information handy if you go in person. Whether you do it online or in person, the bank will make you fill out an application. Besides plan and personal information, the bank will also ask you to choose fund your account. You can fund the account via automatic deposit or check deposit. Some banks will also have their own methods of allowing you to fund the account, such as an electronic money management system. Banks that have online-only HSAs may not let you put in a deposit in person.
2. Submit your application. From there, the bank will process your application and eventually you will receive a debit card, routing number and account number, very similar to when you open a checking account.
3. Once the bank has opened your account, you are free to use the HSA for whatever medical needs that may arise. The Internal Revenue Service will allow you to fund the account up to your deductible, usually around $3,000 for an individual, $6,000 for a family. Your account balance will earn interest and any withdrawals are tax free for medical expenses. Although HSA's have tax advantages, you will have to report any action in your account to the federal Internal Revenue Service. However, the bank should help you prepare the appropriate forms to make reporting much easier.
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